The money ____ equals 1 divided by the reserve requirement. The larger the reserve requirement, the ____ the money multiplier.

Question

Quizplus · Accepted Answer

The money multiplier is inversely proportional to the reserve requirement, meaning that as the reserve requirement increases, the money multiplier decreases. Therefore, the larger the reserve requirement, the smaller the money multiplier. The correct term for the first blank is "multiplier," not "supply."

The Money ____ Equals 1 Divided by the Reserve Requirement